National Grid licence change could cut gas bills by £40m
12 August 2010
Gas shippers have welcomed Ofgem's plans to make a technical change to a licence given to National Grid which will mean it won't be able to benefit from a "windfall" allowance for infrastructure it was expecting to provide but which hasn't been needed.
If the licence change is made gas bills could be reduced by up to £40 million, according to sector body the Gas Forum.
National Grid Gas was allowed this money so it could construct a connection from its National Transmission System (the high pressure gas grid) to Canatxx's planned Fleetwood gas storage facility.
But despite multiple planning applications and appeals the scheme has not yet obtained planning consent and the connection signaled in 2006 has not been built by the gas transmission company..
The Gas Forum said it strongly supported the development of gas storage facilities. However, the failure of this particular facility to climb off the drawing board has meant that National Grid is able to earn the associated revenue even though the storage facility has not been developed and the connection to the grid has never been built.
Forum spokesman Kyran Hanks said: "The regulator has explained that it made a mistake in its licence drafting. This could mean a windfall profit of up to £40m for National Grid over the next five years, the cost of which would be picked up by gas customers. This is clearly wrong. The project no longer exists and nor does the gas pipe that National Grid is being paid for.
"Once this licence change has been approved it will be possible for a gas shipper to request that Ofgem takes action to protect consumers' interests by blocking the unearned revenue of up to £40m to National Grid."
Source:
Utility Week
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